Matthew Smith
Matthew Smith is Oilprice.com’s Latin-America correspondent. Matthew is a veteran investor and funding administration skilled. He obtained a Grasp of Regulation diploma and is presently positioned…
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By Matthew Smith – Mar 12, 2025, 4:00 PM CDT
- Argentina’s Vaca Muerta shale formation has seen a tenfold improve in oil manufacturing, making the nation South America’s third-largest oil producer.
- Overseas funding and main infrastructure tasks, such because the Vaca Muerta Sur pipeline, are driving additional improvement and growing export capability.
- The expansion in oil and gasoline manufacturing is predicted to considerably enhance Argentina’s GDP and remodel it into a serious vitality exporter.
Argentina’s controversial president Javier Milei, a self-described anarcho-capitalist, on taking workplace enacted strict austerity measures to rein in rampant triple-digit inflation, kick-start the financial system and slash a large fiscal deficit. Whereas it’s too early to inform if Milei has reversed many years of financial mismanagement there are promising indicators of a miracle rising. Inflation has plummeted whereas Argentina’s strife-torn financial system is returning to progress boosting the country’s appeal to foreign investors. This, in flip, is fueling investment in the vast Vaca Muerta shale, inflicting oil and gasoline manufacturing to soar. Certainly, by the top of 2024, Argentina overtook Colombia to develop into South America’s third-largest oil producer, with indicators of large manufacturing progress forward.
The 7.7-million-acre Vaca Muerta, Spanish for Useless Cow, shale located in Argentina’s Neuquén province is touted to be the third largest hydrocarbon-rich geological physique of its kind globally. The geological formation has lengthy been seen as an economic silver bullet by Argentina’s federal authorities within the capital Buenos Aires. Whereas the unconventional hydrocarbon basin has usually been in comparison with the Eagle Ford shale, recently, analysts are asserting that its high quality is on par with the prolific Permian Basin, the biggest U.S. oil-producing basin. Certainly, the Vaca Muerta is ranked because the world’s fourth largest shale oil useful resource, with the U.S. EIA estimating it contains 16 billion barrels of recoverable shale oil and second for pure gasoline with 308 trillion cubic toes of shale gasoline.
Whereas the formation was found by Spanish international vitality main Repsol in 2010, it wasn’t till President Cristina Fernández de Kirchner nationalized Argentina’s YPF, seizing 51% from Repsol in April 2012, that exploitation started in earnest. Since then, Argentina’s hydrocarbon reserves and manufacturing have grown prodigiously. Between 2014 and 2024, the Vaca Muerta’s oil production expanded tenfold, hovering from an estimated 45,000 barrels of oil per day to 453,000 barrels every day for December 2024. The shale formation is now the first driver of Argentina’s rising hydrocarbon output, answerable for half of all petroleum and pure gasoline lifted throughout 2024 in comparison with a negligible share a decade earlier.
On account of this spectacular progress, Argentina’s complete 2024 oil manufacturing hit a mean of 702,000 barrels per day, a ten.5% year-over-year improve and a report excessive. Surprisingly, December 2024 petroleum output of 757,122 barrels every day, with 60% from the Vaca Muerta, exceeded Colombia’s 755,469 barrels per day for the month making Argentina South America’s third-largest oil producer.
Supply: Argentina Secretary of Vitality and Nationwide Hydrocarbons Company of Colombia (ANH – Spanish initials).
There may be sturdy progress forward for Argentina’s hydrocarbon sector and petroleum manufacturing with the Vaca Muerta within the early phases of a mega-unconventional oil and gasoline increase.
Hydrocarbon manufacturing within the shale basin will hold rising at a strong clip as extra important quantities of capital are invested within the Vaca Muerta’s improvement. This consists of developing urgently wanted essential petroleum infrastructure, notably pipelines to spice up takeaway capability and storage services. It’s estimated that in 2024 operators within the Vaca Muerta shale, which varieties a part of the Neuquén Basin, invested over $9 billion in growing the unconventional oil and gasoline acreage. That quantity will continue to grow as Argentina turns into a extra enticing vacation spot for international funding.
Argentina’s nationwide oil firm, YPF, is main the cost. The state-controlled built-in vitality main is the biggest producer and investor within the Vaca Muerta. Throughout 2024, YPF spent $3 billion on its unconventional acreage and lifted a mean of 219,328 barrels of shale oil and 835 million cubic toes of shale gasoline per day. This, authorities information exhibits, made the state-controlled oil firm answerable for 55% of Argentina’s shale oil output and 27% of shale gasoline. YPF intends to increase funding within the Vaca Muerta with the shale formation the first driver of Argentina’s vitality manufacturing and a rising contributor to the crisis-prone financial system.
Importantly, the Vaca Muerta is gaining appreciable curiosity from international oil firms, notably Massive Oil, which, with deep pockets, is an important investor wanted to develop the acreage and infrastructure. Information from Argentina’s Secretariat of Vitality exhibits that three of Vaca Muerta’s high 5 oil producers are international vitality firms. Vista Vitality, a Mexico-based impartial oil firm, ranked second in 2024, lifting 60,374 barrels per day, which represented 15% of all shale oil produced that yr. Supermajor Shell was third, pumping 33,130 barrels per day or 8% of Argentina’s shale oil output for 2024. The fourth largest producer is Pan American Vitality, 50% owned by British supermajor BP with the rest managed by Bridas, which lifted 22,565 barrels per day or almost 6% of all shale oil lifted.
YPF, which is the highest oil producer in Argentina and the Vaca Muerta, will proceed rising its hydrocarbon manufacturing at a strong clip. Analysts anticipate the nationwide oil firm will make investments $5.5 billion in its operations throughout 2025, with round 75% destined for upstream operations, notably YPF’s acreage within the Vaca Muerta. This, based on CEO Horacio Marin, will boost 2025 shale oil production by 30% to 40%. Spending on the Vaca Muerta is forecast by Buenos Aires to reach $15 billion this yr and $16.5 billion for 2026. A big a part of that funding can be in vital infrastructure geared toward boosting takeaway and storage capability.
A key piece of infrastructure underneath improvement is the $3 billion Vaca Muerta Sur pipeline. YPF budgeted $2 billion for the undertaking with international supermajors Shell and Chevron committing to investing within the facility on the finish of final yr. The pipeline, which would be the largest in-built Argentina to this point, will join the Vaca Muerta to a brand new export terminal underneath development within the Gulf of San Matías. It’s anticipated the pipeline come on-line throughout mid-2027 with a capability of 550,000 barrels every day which can considerably raise takeaway capability from the booming shale formation. By eradicating a key bottleneck, an absence of transport capability, the pipeline will help additional manufacturing progress within the Vaca Muerta.
The geological formation can be pumping one million barrels per day by the top of this decade, making it one of many top-producing shale basins within the Americas. As such, Argentina will overtake Colombia and Venezuela to develop into South America’s second-largest oil producer, behind Brazil, and the third-largest in Latin America. Analysts predict this might add $10 billion, or doubtlessly extra, to Argentina’s gross home product by 2030. Oil and gasoline shipments are forecast to rise by $21.1 billion, from $8.5 billion in 2024, to develop into Argentina’s single largest export. These developments will give the crisis-riven economy a healthy boost which can additional strengthen President Milei’s financial reforms.
By Matthew Smith for Oilprice.com
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Matthew Smith
Matthew Smith is Oilprice.com’s Latin-America correspondent. Matthew is a veteran investor and funding administration skilled. He obtained a Grasp of Regulation diploma and is presently positioned…
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